The deadly coronavirus could lead to New Zealand's economy taking a $250 million hit, new figures reveal.
The Treasury has established an emergency inter-agency coronavirus task force to figure out just how badly the deadly disease will impact New Zealand's economy.
Finance Minister Grant Robertson says the Government is ready to do what it can if things turn particularly sour.
He told MPs this morning that although it is still early days, the initial forecasts are that New Zealand's economy could take a more than $250 million hit.
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He did, however, point out that most of the economic damage would be felt in the first quarter of this year and would likely rebound throughout 2020.
This comes as the financial markets eagerly wait for the Reserve Bank's quarterly Monetary Policy Statement (MPS), where the bank's Governor Adrian Orr is expected to provide his own update.
Speaking to Parliament's finance and expenditure select committee this morning, both Treasury Secretary Caralee McLiesh and Robertson were at pains to point out there was still a lot unknown about the potential economic impact of the disease.
"The short story, though, is clearly it will have an impact on this quarter's GDP because we are seeing the immediate impacts," Robertson said.
He cited a reduction in Chinese tourism numbers, as well as strains on education and exports to China.
"Economists from banks, and also the international community are predicting that the [Coronavirus] could shave around 0.3 per cent off Chinese GDP.
"If that flows into New Zealand, you can make a calculation of around about 0.1 per cent – but that is just at the very, very early stages."
That works out to be roughly $260 million less economic growth than had previously been expected by the end of the year.
The death toll from the virus has now surpassed the 1000 mark, with 42,000 confirmed cases in China.
McLiesh told MPs this morning that the Treasury was keeping a very close eye on the coronavirus and has established a task force of key Government agencies to stay on top of developments.
This includes the likes of the Ministry of Business, Innovation and Employment and the Ministry of Primary Industries.
"The Treasury has also established an economic advisory group, bringing together the relevant agencies to make sure the Government can co-ordinate advice to Ministers."
In terms of when the Treasury is able to provide an update on the actual impact of the virus, McLiesh said that would be at the next Budget update – likely in a few months' time.
But she played down the outbreak having any major effect on New Zealand.
"At this point, we think the impacts will be measurable, but still somewhat limited," she said.
"As a small open economy, we can never afford to be complacent.
"But New Zealand's economy, finances and institutions are very well placed to manage risks."